Consumer Group Set to Debunk FCC USF "Crisis"

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Consumer Group Set to Debunk FCC USF "Crisis"

In November 2005, the Keep USF Fair Coalition  released its report entitled “Losing Numbers:  How America’s Most Vulnerable Consumers Could Suffer Under Universal Service Fund (USF) ‘Reform’” noting:

“The currently consumer-friendly ‘pay for what you use’ approach to funding the Universal Service Fund would be replaced under the Martin plan with a regressive, flat-fee arrangement of $1–$2 or more per phone line — regardless of whether or not consumers even make a long-distance call. For a consumer who now dials only a handful of long-distance calls per year and pays correspondingly low USF taxes, the effective tax rate under the Martin plan would soar by more than 1,000 percent on an annual basis! With low-income and elderly consumers already socked with high gas prices, the prospect of soaring winter heating bills and continued inflation in medical prescriptions, the wide range of diverse groups in the Keep USF Fair Coalition are opposing the Martin ‘numbers’ based plan.  These groups caution against balancing USF finances on the backs of the very consumers who use long-distance the least and are unable to afford phone bills that would rise under “numbers” simply in order to subsidize high-income/high-volume callers.”

Today the group announced it will present data disputing the FCC’s claims on Monday February 27..

Interested parties can join the live, telephone-based news conference and Q&A, by dialing 1-(800) 860-2442 prior to the 1:30 p.m. ET start time on February 27, 2006. (Don’t forget to ask for the USF funding crisis hoax news event. A recording will be made available on the Web site after 6pm on the 27th.

The release announcing the event follows. 

Consumer Group To Expose “Hoax Crisis” Being Used To Justify Higher Federal Phone Fee Tax On 43 Million American Households

Data Does Not Support Claims of Imminent Peril to USF Fee Formula; Basis Doubted for Urgency Cited by FCC Chair, Lawmakers.

WASHINGTON, D.C.//News Advisory///Radical proposals from Federal Communications Commission (FCC) Chairman Kevin Martin and some members of Congress to change the federal Universal Service Fund (USF) phone fee in a way that would raise taxes by more than $700 million on 43 million low-income, rural, senior and minority households is based on the “hoax” that the current USF contribution system is broken and needs to be repaired, according to data that will be presented at 1:30 p.m. ET on February 27, 2006 by the Keep Universal Service Fund Fair (KUSFF) Coalition.

In exposing the phony “USF funding crisis,” the KUSFF data will show that the USF contribution factor has remained relatively constant over time and requires at most minor adjustments that can be accomplished without hefty increases in federal phone fees for those who make few or no long-distance calls and also are least able to pay higher phone taxes.  Among others, FCC Chairman Martin has justified his calls for an anti-consumer overhaul of USF by making unsubstantiated claims that the USF contribution formula is on the verge of collapse.  The U.S. Senate Commerce Committee will hold hearings on February 28th on the future of the USF contribution formula, which actually is on track to generate hundreds of millions of dollars more in 2006 than it did in 2005.

News event speakers will be Maureen Thompson, executive director, Keep USF Fair Coalition and representatives of member Coalition groups.

Feedback for Consumer Group Set to Debunk FCC USF "Crisis"

1 Comment

Uh, Greg, do you realize that the "Keep USF Fair Coalition" is, according to Bruce Kushnick of Teletruth, "mainly comprised of astroturf and co-oped groups funded by the Bell companies and are being coordinated by Issue Dynamics and Sam Simon, to push the Bell monopoly agenda. In this case, this group is pushing an anti-customer position on the Universal Service Fund -- Raise this tax and put it on new services, including VOIP"?


Ted Wallingford also blew the whistle on this group in his post on his VoIP Weblog:

"A group known as the Keep USF Fair Coalition, which appears to be nothing more than a conglomerate of phone company lobbyists, wants the FCC to mandate the Universal Service Fund tax be levied on VoIP services. This would amount to an increase in your monthly VoIP bill and make it so that your VoIP carrier has to remit the same Universal Service taxes that its competing traditional Bell carrier must remit.

"The Keep USF Fair Coalition uses race politics and the mythical "cheap telephone service for the disadvantaged" idealogy in order to support subtle barriers to entry for new competitors in the phone industry (like Vonage and Packet8), all while under the guise of fairness and equity. There's even a pathetic, nonsensical quote from the NAACP featured on their web site, and one of their pages, which dishonestly portends an opposition to tax increases, has a picture of a disabled person in a wheelchair.

"Last time I checked, blacks and the disabled have the same access to VoIP services as any other broadband consumers. That said, why does this so-called coalition contend that because you're black or disadvantaged, somehow you are going to suffer more from Universal Service taxes than if you're non-black or fully-mobile? For that matter, why is this organization lumping blacks and the disabled into the same consituency?

"If the Keep USF Fair Coalition wants the disadvantaged to have easier access to Voice over IP phone services, why don't they take step to DECREASE the consumer cost burden of such services? If they really had the interests of consumers at heart, they would abandon their position of applying the USF tax to VoIP, because doing so would actually make it MORE COSTLY for everybody.

"The reason for all of this silliness appears to be very simple. The Keep USF Fair Coalition, who naturally doesn't list any Bell carriers as members, is comprised of lobbying groups tied to race politics, disability politics, and farm subsidy politics. But the real profiteer of their efforts, at least in this case, is the encumbant phone companies, who view a possible USF extension to VoIP services as a way of leveling the playing field with their scrappy young competitors."

Ted's blog post is at

Unfortunately, we live in a day where a group may claim to represent the public interest, disadvantaged consumers, etc. but may actually be nothing more than sock puppets for, or groups that in some way are receiving compensation from the big phone companies (even if it's under the table compensation in the form of "corporate philanthropy").

My position is that the USF should be abolished outright - there is absolutely nothing it accomplishes that could not be accomplished more fairly by some other mechanism, and right now it's a hidden tax telephone users that nobody gets a vote on - in effect it's taxation without representation. Didn't our forefathers dump a bunch of tea into the Boston harbor over something like this?

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